The global pandemic has had a dramatic impact on consumers’ financial behavior. Consumers spent more time at home in 2020, transacted less than in previous years, and relied heavily on streaming services, digital commerce and payments. They were also victims of identity fraud scams to the tune of a whopping $43 billion in losses for 2020, according to new data from the 2021 Identity Fraud Study released by Javelin Strategy & Research, part of the Escalent family.
Stuck at home and interacting online more than ever, consumers lost an average of $1,100 per scam.
As consumers relied increasingly on digital payment products during 2020, fraud losses related to digital wallets and peer-to-peer (P2P) accounts spiked. Payment products meant to enhance convenience also introduced new opportunities for compromise. The entire financial ecosystem should be on notice as consumers become increasingly invested in fraud management and expect more from the financial institutions and apps they use.
Why should financial institutions pay close attention to this? Because nearly one-third of identity fraud victims say their financial services providers did not satisfactorily resolve their problems and 38% of victims closed their accounts because of a lack of resolution at the financial institution where their fraud occurred.
The good news is that growing acceptance of various digital payment channels presents an opportunity to increase consumer awareness of stronger forms of authentication. Consumers are increasingly receptive to this information and willing to incorporate new fraud protections into their daily routines. Fingerprint scanning and facial recognition, for example, are growing in popularity with consumers, especially as consumers acknowledge that static passwords are not in and of themselves enough to adequately secure account login.
The current climate has also created an opportunity for brand managers to improve the customer experience when resolving ID fraud problems. For example, financial institutions can direct consumers to opt into additional layers of fraud protection within their account interface or highlight proactive fraud management best practices, such as ensuring that all contact details are up to date.
As consumers become increasingly savvy online, safe digital transactions will form the foundation for a productive and secure remote financial ecosystem. Consumers want better fraud prevention and faster payments and they are willing to embrace new authentication processes to have both.
Want to know more? Visit the Javelin website for more information on the 2021 Identity Fraud Study: Shifting Angles.